Russia to extend Trans-Eurasian rail project to Korea

A South Korean train passes over a cross-border railway bridge near the Demilitarized zone (DMZ) in Paju, north of Seoul on August 21, 2009. (AFP Photo) / AFP

Russia will team up with North and South Korea in a railroad construction project that could restore peace between the two neighbors. The link will extend the world’s longest railroad, so goods can be shipped between Europe and Korea 3x faster.

Russia’s Minister for Far East Development Aleksander Galushka
announced the plan to extend the Trans-Siberian Railroad at a
meeting in Vladivostok on Thursday.

The expansion would provide a link between the Korean peninsula
and Europe’s $17 trillion economy, making Russia a major transit
route between Europe and Asia. Shipping by rail is nearly 3 times
faster than via the Suez Canal, Russian Railways CEO Vladimir
Bakunin has said.

“We have agreed to launch trilateral projects between Russia,
DPRK and South Korea with a focus on the railroad project. It’s
important to extend the Trans-Siberian Railroad to the Korean
peninsula. It will serve to stabilize and improve the situation
on the Korean peninsula as a whole,” Galushka said at the
sixth annual Russian-Korean meeting on trade, economic,
educational, and scientific cooperation.

Russian Railways has already started a direct rail service
between Hamburg, Germany and Zhengzhou, China, a journey that
only takes 15 days via Kazakhstan, Russia, Belarus, and Poland.

Up until now, North Korea has been very hesitant in letting in
foreign partners to develop its aging and decrepit rail system.

In September, Russia re-opened a 54 kilometer railway link that connects
Khasan, the last Russian city before North Korea’s border to the
North Korean port of Rajin.

The extension of the 9,000 kilometer railway to North and South
Korea will be a big undertaking, especially in North Korea where
enormous repairs are needed to revamp the dilapidated state of
the railway. The poor state of roadbeds only allows trains to
travel at speeds of 20 miles per hour, or not at all.

It has already been announced that Mechel, Russia’s biggest
steelmaking company, will supply materials for the first stage of
the project.

Another possible partner in the equation would be South Korea’s
Hyundai Construction, which has already expressed eagerness to
participate in any Trans-Eurasian rail projects.

Connecting the major commercial hubs of Moscow and St. Petersburg
with industrial cities in Russia’s Far East, the Trans-Siberian
Railway tracks already stretch across the Ural Mountains,
Siberia, to Russia’s northern port cities, and connects to routes
to Mongolia and China.

Travel by railway between North and South Korea has been
completely closed since 1951, and remains closed today. For a
brief stint in 2007-2009, a cross-border rail service operated.

Cooperation between the two Koreas on the railway could lead to
compromise on a long-delayed plan to build gas pipelines and
connect both Koreas with Russian gas.

Russia's pivot east

Since the West has reacted to Russia’s actions in Ukraine with
economic sanctions, Russia has begun bolstering ties with eastern
neighbors like China and North Korea.

In May, Russia's state-run Gazprom signed a 30-year gas deal with China valued at $400 billion.

Russia and North Korea also announced that trade between the two
countries will now be settled in rubles.

The two countries have set a goal of reaching $1 billion in trade
by 2020. In 2013, trade between the neighbors rose by 64.2
percent to reach $112.7 million, which Galushka said was “not
enough”.

North Korea is largely ostracized by the rest of the
international community in a US-led effort to isolate the nation
over its development of a nuclear weapon program.

Russia also proposed to invest into the Kaesong Industrial Park,
a special economic zone in North Korea that employs more than
50,000 North Korea workers in South Korea companies.

In May, Russian President Vladimir Putin signed into law an
agreement that will write off much of Pyongyang’s Soviet-era
loans. Russia will forgive 90 percent of North Korea’s debt from
the Soviet era, leaving $1 billion to be repaid interest free in
the next 20-40 years. Russia also recently cancelled $29 billion of Cuba’s Soviet era debt.

Galushka said the forgiveness of the debt has paved the way for
stronger ties between the two states.